Chapter 12

What clause in a mortgage permits the lender to declare the entire unpaid balance due immediately upon default?

Acceleration clause

Which of the following situations would be considered for a short sale

Amount owed is more than market value

A borrower is charged 4.5% interest rate, one discount point, and one point for loan origination. Which one increases the lender's yield (rate of return) on its investment

Discount point

What is a division of the U.S. Department of Housing and Urban Development (HUD) that administers special-assistance programs and guarantees mortgage-backed securities using FHA and VA loans as security?

Ginnie Mae

A property loan is underwater. What does this mean?

Loan amount is more than the market value

What gives the creditor the right to sue for foreclosure

Mortgage

What is a voluntary, specific lien against the property?

Mortgage

Who arranges loans using someone else's money

Mortgage brokers

Which is the borrower's personal promise to repay a debt according to agreed terms

Note

What must an owner sign when a property is to be mortgaged

Promissory note and mortgage

The mortgagee foreclosed on a building lot after the borrower defaulted on the loan payments. At the foreclosure sale, however, the lot sold for only $29,000. The unpaid balance of the loan at the time of the sale was $40,000. What must the lender do to recover the $11,000 the borrower still owes?

Seek a deficiency judgment

A borrower obtained a $7,000 home equity loan for five years at 4% interest per annum. Monthly payments were $50. The final payment included the remaining outstanding principal balance. What type of loan is this?

Straight loan

In one state, the lender has immediate right to possession upon default. To what theory does this state subscribe?

Title theory

What is the purpose of a mortgage

To provide security for the loan

A friendly foreclosure enables a mortgagor to prevent the mortgagee from taking the property by statutory means. This can be accomplished by

a deed in lieu of foreclosure

Before a lender can foreclose in an intermediary state, the lender must first provide

a notice of intention to foreclose

A buyer wants to assume the current mortgage because the interest rate is lower than the buyer can currently obtain. However, the buyer is prevented from assuming the old loan by the existence of the

alienation clause.

A real estate loan payable in periodic installments sufficient to pay the principal in full during the term of the loan is called

an amortized loan

The original lender may sell the mortgage note to a third party, such as an investor or another mortgage company, by

assignment of mortgage.

Which situation allows the lender to file for a deficiency judgment

d. Foreclosure sale does not bring as much money as is owed

The pledging of property as security for payment of a loan without giving up possession is called

hypothecation

One requirement of the Mortgage Bankers and Brokers and Consumer Equity Protection Act is that mortgage brokers

must be licensed

To avoid lost interest when a loan is repaid before the end of the term, some mortgage notes include a

prepayment penalty

Service fees may be collected on

processing payments of taxes and insurance

Laws that limit the amount of interest that can be charged to the borrower are

usury laws